Bye-Bye RedHat, Hello HashiCorp

In the wake of the RedHat acquisition by IBM there is accelerating strategic interest around open source software. This last year has also seen both blockbuster M&A activity (Github and Mulesoft) and strong IPO receptions (Mongo and Elastic) for open source companies across a variety of infrastructure layers. Having been an early stage investor in enterprise technology for two decades and having directly interested in over a dozen open source companies, it feels like the technology world is finally waking up to the disruptive nature of open source and cloud.

The new reality is that open source is the key driver around the adoption of enterprise infrastructure software. Gone are the days of just hiring expensive enterprise reps. Now the new battleground is the hearts and minds of developers and architects. They are the ones that experiment with and ultimately select the winning technologies. Infrastructure companies need to attract communities and create movements around their technologies.

All of the public cloud providers understand this new go to market motion and so in addition to now acquiring open source vendors they are often both contributing to (like Google with Kubernetes) and taking from open source technologies. But, just because there are competing offerings from AWS, Azure and GCP doesn’t mean its game over. There are still significant opportunities for independent players to still succeed wildly despite the cloud providers considerable market power (Elastic vs AWS Elastic). Most enterprises are aware of the advantages of portability and they also have concerns about lock-in (remember Unix and RDBMS battles?). Enterprises grasp the importance of a multi-cloud strategy.

One company that inherently understands this market dynamic and provides multi-cloud solutions is HashiCorp. Over the past 5 years they have quietly built an impressive portfolio of open source solutions, each with its own large and vibrant community of developers, partners and customers. Each product (Terraform, Vault, Consul and Nomad) has garnered significant adoption, largely based on technical merit and a clear design that targets specific developer or operations problems and workflows.

RedHat was by far the largest pure open source company. But as a result of their acquisition the chessboard has one less big player. The other cloud players will undoubtedly have to make counter-moves. As the incumbents grapple with this changing landscape, there will be significant new opportunities for startups to fill the void.

Today HashiCorp announced a $100M growth round that will enable the company to expand their commitment to open source, customers and partners. It will be incredibly exciting to participate in this next phase of the journey - Go HashiCorp!